Guarantees, limits and credit curbs imposed on construction projects China’s top banking regulator has ordered commercial banks to impose tighter controls on lending to local government financing vehicles after a strong rebound in new loans in March. An official at the China Banking Regulatory Commission confirmed to China Daily on Monday that CBRC has issued a guideline to banks on April 9, prohibiting them from increasing the scale of loans made to such vehicles. And the proportion of loans to those projects that cannot be 100 percent covered by cash flows, or with a debt-asset ratio lower than 80 percent, cannot be higher than those made in the previous year, it said. Apart from loans, banks are required to include corporate bonds, medium-term notes, short-term financing bills, trust plans and wealth management products in their statistics on financing vehicles’ debts. In addition, banks should not provide guarantees for the vehicles’ debts, and must be cautious with regard to holding bonds issued by such vehicles, according to the guideline. "Banks should continue to control the total amount of loans made to local government financing vehicles, based on the principle of guaranteeing under-construction projects, limiting support for reconstruction projects, and curbing credit to new projects." The commission’s requirements came two days before the People’s Bank of China announced an unexpected amount of new yuan loans in March, sparking concerns over increased local government debt. Xiang Huaicheng, minister of finance from 1998 to 2003, said earlier this month that he estimated local government debt was around 20 trillion yuan ($3.22 trillion), nearly double the official estimates. Banks lent out 1.06 trillion yuan in new yuan loans last month, compared with 620 billion yuan in February, according to central bank data released last Thursday. Total social financing, which includes all kinds of loans, bond issuance and stock sales, surged to 2.54 trillion yuan in March compared with 1.07 trillion yuan in February.